2020 has been a chaotic year, and many business owners may need some extra time to get their affairs in order before submitting their upcoming tax returns. While the IRS has extended the date from April 15 to July 15, businesses can still apply for a tax extension if they wish to.
TPI Group’s tax preparation services can help you to file your tax return. We can provide you with many answers to your questions, including how to file a business tax extension for 2020. Taxes can be complex and confusing, so let us make things easier for you.
Which Form Do I Need to Apply for a Business Tax Extension?
To get a business tax extension, you will need to file Form 7004, which is called the Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. It allows for an additional five or six months from your tax return’s original due date.
Since the government has already postponed the deadline to file a business tax return, it also applies to making payments. Taxpayers can postpone federal income tax payments from April 15 to July 15, and they will not have to pay any penalties or interest since the date was officially changed.
Depending on the type of business you are classified as and whether your tax year is fiscal or calendar, there are some due dates you need to remember:
- C Corporations consist of a legal structure that requires them to be taxed as a separate entity from the owners and shareholders. To file a tax return, a C Corporation uses Form 1120. C Corporations must file their Form 7004 by the 15th of the fourth month after their tax year ends.
- S Corporations have a special tax status where they can provide their corporate income, losses, and more to their shareholders, who apply the information to their personal tax returns. However, if the S Corporation was a C Corporation at one time, it may owe corporate-level tax. An S Corporation fills out Form 1120S. S Corporations must file their Form 7004 by the 15th of the third month after their tax year ends.
- Partnerships do not pay income tax; instead, they file information returns to report their income, losses, etc. However, each partner must receive a Schedule K-1 (also known as Form 1065). Since they are not employees, they do not receive a Form W-2. Partnerships must file their Form 7004 by the 15th of the third month after their tax year ends.
Note: Starting at the beginning of a quarter, a fiscal year is a 12-month period that can begin on the first of January, April, July, or October. A calendar year follows the calendar, beginning on January 1.
Can I File Form 7004 Electronically?
The IRS may deny your extension request if it isn’t filed by the due date of the tax return. Consequently, businesses are encouraged to file as soon as possible to receive their tax refunds and doing so electronically is the best way. Opting for direct deposit speeds up the transaction even more.
Can I File an Extension for an LLC?
A Limited Liability Company (LLC) can apply for an extension. An LLC can be set up in different ways. If it’s a LLC partnership, a Form 1065 must be filed. If it’s set up as a C Corporation, a Form 1120 will need to be filed.
File Your Tax Return with Confidence
Keep in mind that once you file your return, you must keep all pertinent business records for a certain period of time. This ensures that you can provide evidence should the IRS claim there is a mistake with your taxes.
But with a TPI tax consultant, we can significantly reduce your chances of errors, help you to pay your taxes on time, and advise you on the best ways to keep your business running smoothly. Our services effectively save business owners from unnecessary stress while providing them with more time to focus on their company.
Contact our team to get an extension, or learn more about how we can help you!